Merchant device for interacting with portable hand-held multi-function device having multiple transaction accounts

ABSTRACT

A system and method for operating a reward points accumulation and redemption program wherein a user earns reward points from a plurality of independent reward points issuing entities, with each tracking the user&#39;s earned reward points in a user reward point account stored on a multi-function card (such as a frequent flyer account or a credit card loyalty account). The multi-function card is adapted to aggregate some or all of the user&#39;s earned reward points from the reward accounts and credit the aggregated points into a single reward exchange account on the multi-function card. The user may then select an item for purchase with the accumulated reward points from the multi-function card. The item is provided to the user in exchange for a subset or all of the reward points from the multi-function card.

BACKGROUND OF THE INVENTION

The present invention relates to a multi-function card such as a smartcard, usable by a consumer for one or more functions such as a debitcard, credit card, medical card, insurance card, club card, check card,or a loyalty card for use in a customer loyalty programs, and inparticular to such programs that allow users to earn, barter, trade,manage and/or redeem reward points and other types of value (such asreward points obtained from bank-issued credit card programs such asCITIBANK or airline frequent flyer programs such as DELTA) into a numberof individual reward or access accounts and a reward exchange accountstored on the multi-function card, for obtaining products and servicesin exchange for those points or other value. This would allow users touse their accumulated values such as frequent flyer reward points, whichare stored on the multi-function card, for products or services. Inparticular, this invention provides a real-time interactive and portableplatform for managing the user's individual and aggregated rewardaccounts on a portable multi-function card such as a smart card, and forstoring and/or modifying user profile information on the smart card byan authorized merchant, system operator, or other entity.

Consumers in today's world typically carry many cards on their person,such as credit cards, debit cards, frequent shopper or loyalty cards,smart cards, access cards, identification cards, medical benefit cards,etc. Each of these cards allows the user to execute a commercialtransaction as well known in the art. Carrying such a multitude of cardsaround is cumbersome, and many times the consumer does not have the cardhe may need for a specific purpose. In addition, having a multitude ofcards leads to a fragmented system of commerce. That is, there is noeasy way to tie together programs from various cards such that anactivity executed with one card (such as a credit card purchase)provides a desired result with another disparate card (such asincreasing loyalty points in a general account).

Loyalty programs implemented with a consumer card, such as frequentflyer programs, frequent shopper programs, and the like, award loyaltypoints to its users based on purchases of goods or services made underthe program. A typical example is an airline frequent flyer program thatawards one point for each mile traveled on the airline. In this case, around trip ticket from New York to California would result in thecustomer getting approximately 6,000 points in his airline account. Apurchase made at a drugstore might be discounted if a consumer produceshis frequent shopper card for that store. Similarly, credit card issuerssuch as CITIBANK award points for each dollar spent using their card.

The prior art does not provide for a consumer to utilize relativelysmall amounts of reward points or other types of merchant-providedvalue. In addition, even if a consumer does have a large number ofreward points in a given reward account, he or she often can only redeemthose points in a manner related to the issuing entity (e.g.airline-issued reward points may only be used for a free ticket orupgrade from coach to first class). This prior art does not recognizethe need for a consumer to exchange reward points for non-travel relatedgoods, and in particular renders relatively small numbers of pointsuseless. For example, a consumer that does not travel often may have 500points in UNITED AIRLINES, 700 points in USAIR, and 1000 points inDELTA, each of which is relatively useless in the prior art.

What is desired therefore, is a system where users may pool or aggregatethe various earned rewards or other types of value into an exchangeaccount, where the resulting value of the combined reward points orother value may be used to acquire items otherwise unobtainable with theindividual reward accounts.

U.S. Pat. No. 6,594,640, (“the '640 patent”) invented by the sameinventor of the present application (and which is incorporated byreference herein), describes such a centralized reward points exchangesystem wherein a trading server computer executes trades of rewardpoints from various reward points server computers into a reward pointexchange account so that the aggregated reward points may beadvantageously used for obtaining goods and services otherwiseunobtainable. In addition to implementing a central server for storingreward point exchange accounts into which reward points are aggregatedfrom various independent reward accounts as in the '640 patent, it isalso desired to be able to track reward point accounts, both individualas well as aggregated reward points and other types of merchant-providedvalue, in a portable mechanism that may be carried by a user withoutreliance on a central server system, such as by using a self-containedstorage device such as a multi-function smart card or a peripheraldevice. Smart cards implement processing circuitry, memory storage,input/output means, and user control means, in order to provide a userwith a portable, hand-held solution as described herein.

It is therefore an object of the present invention to provide amulti-function card that allows a user to use one or more of manyavailable applications (such as credit card applications, debit cardapplications, check card applications, etc.) that are encoded orotherwise programmed on the card at any given time.

It is a further object of the present invention to provide a loyaltyprogram implemented on the multi-function card that tracks reward pointsand other types of values earned by the consumer in various rewardaccounts stored on the card and associated with the various applicationsexecuted by the card.

It is a further object of the present invention to provide a rewardexchange account on the multi-function card that allows the user toaggregate reward points or values into the exchange account from one ormore of the individual reward accounts, thus allowing for increasedpurchasing power due to the aggregated reward points, on a portablemechanism that can be utilized without reliance on a central serversystem as in the '640 patent.

SUMMARY OF THE INVENTION

The present invention is a multi-function card (e.g. consumer card,government card, corporate business card, etc.) such as a smart cardthat integrates several types of functions, such as a credit card, debitcard, loyalty card, and an identification card. The user may select thedesired application for a given transaction, such as by selecting acredit card function for the purchase of an item from a merchant. Themulti-function card also has memory for storing various accounts thattrack items of value such as rebates, coupons, reward points, etc.issued by various entities. A frequent flyer reward points program istypical of the programs to be implemented by this invention. These itemsof value may be utilized by the user during a purchase transaction, suchas a coupon for 10% off of the purchase price of a certain item. Inaddition, a log may be kept of card activity, which may be downloadedoff of the card at a later time for evaluation, such as for marketingpurposes.

This invention also allows a user to aggregate reward points fromvarious individual reward accounts on the multi-function card into areward exchange account on the card in order to purchase goods orservices using the aggregated reward points. The exchange account istransportable on the multi-function card, as are the individual rewardaccounts, thus decreasing (if not eliminating) reliance on a centralserver system.

In another aspect, the method and system of the invention provides aloyalty program that awards points for purchases made under the program(with or without use of another one of the card programs in themulti-function card) and automatically generates sweepstakes entrycoupons based on the loyalty points accumulated in the program. Thesesweepstakes entries may be electronically stored on the card, or theymay be printed out at a terminal such as a POS terminal, when the cardis utilized there. The sweepstakes entry may be compared at the terminalto a database of previous winners to determine if that entry is awinner.

In a further aspect of the invention, data is collected and stored onthe card regarding the shopping habits of the consumer. For example, alog may be kept that indicates the various stores where the consumer hasmade purchases in a given time period, as well as the items purchased(e.g. by storing UPC codes or the like). Consumer profile informationmay also be stored locally (on the card) or remotely (on a remoteserver), in which case the profile is linked to the card by its uniqueidentification number. In any event, the shopping history, with orwithout various components of the consumer profile, may be archived andexamined for marketing purposes.

In a further aspect of the invention, an RFID chip is embedded on themulti-function card to enable a tracking system to determine thewhereabouts of the card (and its user) in a location such as a retailstore. By keeping track of the user's location throughout the store,useful information may be obtained and analyzed for use in marketingactivities and the like, as described further herein.

BRIEF DESCRIPTION OF THE DRAWING

FIG. 1 is representative of the prior art marketing arrangements used inreward programs;

FIG. 2 is a representation of the co-branded partners in a prior artaward program;

FIG. 3. is a sample of the prior art reward summary from an airlinefrequent flyer system;

FIG. 4 is a block diagram of the components of the present invention;

FIG. 5 is a block diagram of the system components of the presentinvention;

FIG. 6 is a data flow diagram of the process for a user to redeemrewards;

FIG. 7 is a data flow diagram of the user request for purchase of anitem at a merchant site;

FIG. 8 is a data flow diagram of the user account creation process onthe trading server;

FIG. 9 is a data flow diagram of the offer process by a reward programor by a merchant;

FIG. 10 is a data flow diagram of the process where a user may beredirected from a reward program to the trading server of the presentinvention; and

FIG. 11 is an illustration of the use of a smart card with the presentinvention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

The present invention is based on the use of a multi-function card, suchas a smart card, which may be utilized by a user for any of variousapplications programmed therein, such as a credit card, debit card,check card, loyalty card, insurance card, medical card, etc. The smartcard also allows for reward points and/or other types of values to beaccumulated and stored on the user's card every time the card is usedfor associated application. For example, if a user uses his smart cardto pay for a hotel that normally gives reward points, those rewardpoints may be stored on the smart card in an account associated withthat hotel. Likewise, when the card is used for the purchase of anairline ticket, the reward points awarded by that airline would be addedto the smart card in a reward account associated with the airline. Theuser may then redeem the accumulated reward points by inserting the cardinto a smart card reading device or terminal associated with a computerconnected to the Internet or other authorized communication system (e.g.an ATM or other reader). Information provided to the user regarding theuser's reward points is updated after every transaction.

Multi-Function Card Layout

FIG. 11 illustrates a functional block diagram of a multi-function cardunder this invention. The card has processing circuitry such as amicroprocessor or microcomputer, program storage, data memory, and inputoutput functions adapted to perform the functions as described herein.This example illustrates three applications—card application 1 1106,card application 2 1108, and card application 3 1110—although many moreapplications may be implemented as desired. Typical examples of cardapplications are a credit card application, debit card application,check card application, medical card application, insurance cardapplication, and the like. For example, this card may have a CITIBANKVISA application, an AMERICAN EXPRESS application, and a WALGREENSDRUGSTORE application stored thereon.

FIG. 11 also illustrates three reward accounts, each associated witheach of the card applications. Thus, reward account 1 1114 would be aCITIBANK VISA reward account, reward account 2 1116 would be an AMERICANEXPRESS reward account, and reward account 3 1118 would be a WALGREENSreward account. These reward accounts are adapted to store reward pointsthat are issued by the respective entities based on purchases made fromthat entity (in the case of WALGREENS) or purchases made using thecredit card application of that entity (in the case of the CITIBANK VISAor AMERICAN EXPRESS applications). Thus, if a user purchases $50 worthof goods from WALGREENS using the multi-function card, then he wouldreceive 50 reward points from WALGREENS that are stored in the WALGREENSreward account 1118 on the multi-function card. Note that if the useruses his CITIBANK VISA application to pay for the goods, then he mayalso receive 50 reward points from CITIBANK VISA that are stored in theCITIBANK VISA reward account 1114.

The smart card may also store in memory a user profile 1104, whichperforms several functions to be described further herein. The user willbe provided with the ability to select the desired card application1106, 1108, 1110 at any time. For example, a user may want to make apurchase at a merchant using the CITIBANK VISA credit card application1106 on the smart card. He can select the CITIBANK VISA application atthe point of sale by various means as known in the art, such as bybuttons or other input mechanisms on the smart card, or by selecting anapplication from a display screen after the card is read by anappropriate smart card terminal. The terminal is interconnected to anappropriate network as known in the art (such as the CHASE network).Once the CITIBANK VISA application is selected, he may be given a choiceof making payment for the item with (1) credit from the CITIBANK VISAaccount, (2) reward points or other values from his CITIBANK VISA rewardaccount 1114 on the smart card, (3) aggregated reward points from hisexchange account 1120 on the smart card (to be described later), or (4)any combination of the above. If he chooses (1), then he may be awardedCITIBANK VISA reward points which would be logged in his CITIBANK VISAreward point account 1114 on the smart card. If he chooses (2), (3) or(4), then the appropriate number of reward points would be deducted fromthe reward points account 1114 and/or reward exchange account 1120 (tobe described later) and applied towards the purchase of the item.

A default account may be assigned so that when a user presents the smartcard to a POS terminal, that default account is used unless another isspecified. The default account to be used (e.g. CITIBANK VISA) maydepend on the purchase involved, or upon the merchant with which thecard is being used. For example, the card may be programmed to use theCITIBANK VISA application 1106 whenever the user presents the card at asupermarket, but the card may be programmed to switch to the AMERICANEXPRESS application 1108 when the card is presented at a gas station.These default scenarios may be stored on the card in the user profile1104, which may be changed by a user as described further herein. Ofcourse, these defaults may be overridden by the user if so desired atthe point of sale.

As previously mentioned, the integration of the credit card and loyaltycard functionality allows reward points to be granted to the user basedon the credit card transaction, and then directly deposited into thesmart card's local memory.

Likewise, the user may opt to use points from his local (or remote)rewards account in order to pay for the purchase (in whole or in part).Thus, a user may use the multi-function card of the present invention topay for an item, and then be given the following options at the POS:

-   -   POINT TOTAL ACCRUED: ______    -   POINTS TO BE AWARDED FOR CURRENT TRANSACTION: ______    -   POINTS USABLE FOR CURRENT TRANSACTION: ______        -   HOW MANY POINTS DO YOU WANT TO APPLY TO CURRENT TRANSACTION?            ______    -   PRICE IF POINTS USED AS ENTERED ABOVE: ______    -   POINTS REMAINING IF POINTS USED AS ENTERED ABOVE: ______

The user may then make the desired selection and the transaction willproceed accordingly.

Reward Point Aggregation on the Multi-Function Card

A reward point aggregation exchange account 1120 may also be stored inmemory on the smart card. Reward point aggregation is described indetail with respect to a central server system in the '640 patent, whichis also described in further detail below. Basically, reward pointaggregation allows a user to combine points from multiple disparatereward accounts into a single exchange account, and use the aggregatedpoints for purchases of good and services. Thus, a user may choose toexchange 500 points from his WALGREENS reward account 1118 and 2,400reward points from his AMERICAN EXPRESS reward account 1116 into hisreward exchange account 1120. Assuming a one-to-one conversion ratio(which may be different according to the exchange arrangements madebetween the participating entities), then the user would have 2,900aggregated reward exchange points in his exchange account 1120 as aresult of the exchanges. These 2,900 points may then be used to makepurchases from participating merchants. Consideration will be exchangedbetween all participating parties to account for the points exchanged,as described further below with respect to the central server system.For example, the “exchange entity” associated with the reward exchangeaccount 1120 (which may be an independent third party, a party issuingthe multi-function card, or one of the individual reward-issuingentities described above) will receive consideration from the entitythat exchanges reward points into the exchange account. In a simpleexample, when the user exchanges 500 WALGREENS reward points from hisWALGREENS account 1118 into the exchange account 1120, then WALGREENSwill also convey consideration related to those 500 points (e.g. $5.00if the points have a value of one penny per point) to the exchangeentity in exchange for taking the WALGREENS points off of WALGREENSaccount. Since reward points issued by the issuing entity are aliability of the issuing entity, the issuing entity will pay theexchange entity for assuming that liability. As a result, although theexchange entity will now have a 500 point liability to the user afterthe exchange, it has also gained $5.00 to settle that liability when theuser chooses to redeem his exchange points with a merchant.

Discounts may be taken by any party in the transaction to account forthe costs of implementing the program. Thus, the exchange entity mayonly credit the user with 450 points after the exchange transaction,such that it has only a $4.50 liability to the user on redemption of theexchanged points, resulting in a 50 cent (10%) fee on the exchange.Alternatively, the exchange entity may give full 500 points credit tothe user but charge him a transaction fee on the exchange and/or theredemption transaction.

A user may be given access to the individual and exchange rewardaccounts, for example after insertion into a smart card reader orterminal, so that he may control (using reward aggregation application1112) reward point exchanges between the individual reward pointaccounts 1114, 1116, 1118 and the reward point exchange account 1120 asdescribed above. The user can then use the aggregated reward points fromthe exchange account 1120 on the smart card to make purchases atmerchants that agree to accept the aggregated points.

Optionally, the smart card reward point account totals may, if desired,be reconciled at some point with the entities that are associated withthe respective reward accounts. For example, if a user has a CITIBANKVISA reward points account 1114 on his smart card, then he may enter thecard into a smart card reader or terminal, and the terminal maycommunicate with the appropriate CITIBANK VISA server computer over anetwork to reconcile his account with the server. If communications withthe appropriate server is not available during a transaction, then aflag will be set in the smart card memory to indicate that areconciliation must be done at the next available time (i.e. the nexttime communications is established with the server). This will enableCITIBANK VISA as the issuing entity to determine how many reward pointsmay be outstanding (i.e. its liability in reward points). In addition,reward points that have been aggregated into the exchange account 1120may also be reconciled with the exchange entity (the entity thatoperates the points trading system).

The multi-function card may store multiple reward accounts issued by asingle entity, wherein each account is individually tracked and utilizedby the user but wherein the accounts may be aggregated into an exchangeaccount as previously described. For example, a user may hold severalVISA accounts issued by one or more issuing banks (such as a VISA REDaccount, a VISA BLUE account, and a VISA WHITE account), and the userwill use whichever VISA account desired for a given transaction orapplication. Each account is separately tracked, funded, and reconciled,and the reward points may be aggregated into the exchange account 1120on the smart card if desired. In another example, a user may holdvarious CITIBANK accounts on his smart card, such as a CITIBANK VISAand/or MASTERCARD, a CITIBANK investment account, a CITIBANK mortgageaccount, etc. and selectively redeem and/or aggregate reward points aspreviously described.

In one embodiment, accounts associated with various loyalty programs maybe stored on a smart card, wherein the various loyalty programs areconfigured with points that are either partially funded or fully funded.A fully funded reward program provides reward points to users forpurchasing products, for using their services, etc., wherein the rewardpoints are fully accounted for on the accounting books of the entity. Ina partially funded program, only a portion of the reward points may beaccounted for on the books of the rewarding entity, or all of the pointsmay be accounted for but at a discounted (partial) value. By storing thevarious programs on a single smart card, the user may be able to easilyaggregate points from all of the programs into the exchange account asdescribed herein.

As previously mentioned, the present invention allows various types ofvalues (such as reward points, coupons, rebates, etc.) to be stored fromdifferent entities. In an alternative embodiment, certain combinationsof values may provide a greater value as a result of aggregation. Forexample, a pizza restaurant may provide points towards free pizzas,which would be stored on a Pizza account on the smart card. Similarly, asupermarket may provide points for purchasing soda, which would bestored on a Soda account on the smart card. In addition to (or in thealternative to) trading in points for pizza and/or sodas directly, theuser may aggregate the values provided by each of the entities to obtaina sweepstakes entry sponsored by both entities. That is, by aggregatingthe values provided by both reward issuing entities, the user may beable to obtain the individual rewards as well as a reward obtainableonly by aggregating the values together (the sweepstakes entry).

In another embodiment of the present invention, a consumer is providedwith a multi-function card that is sponsored by a retail store or chainof stores such as a drugstore such as WALGREENS. In order to obtain thecard, the consumer must go through a registration process, where he orshe provides personal data such as name, address, telephone number,email address, etc., as well as demographic data such as age and gender.This profile data may be compiled (and optionally stored in the userprofile 1104 on the card) and used for marketing purposes, alone or inconjunction with shopping pattern data collected and stored on the cardduring its use. After completing the registration process, the consumeris provided with the multi-function card that has a unique accountnumber printed thereon (as well as encoded in a bar code and/or magneticstripe). The initial function of the multi-function smart card is aloyalty card for frequent shoppers. When the consumer makes a subsequentpurchase at the drugstore, then he gives the cashier his loyalty cardand the card is swiped, dipped, or otherwise entered into the POSterminal. Data is captured regarding the products purchased by theconsumer, the consumer's account number, the prices paid, etc. Inaddition, points will be credited to the consumer's account, typicallyin the amount of one point per dollar spent. Thus, a purchase totaling$54.00 will net the consumer 54 points. In the alternative, the pointsmay be credited as a function of the amount spent (e.g. purchases over$100 yield a 1.5 point per dollar ratio), or as a function of purchasingcertain classes products (e.g. vitamins yield a 1.25 point per dollarratio) or as a function of purchasing certain brands of products (e.g.all COKE products provide a 2 point per dollar ratio), etc. The pointsare then stored in the associated reward account on the multi-functioncard.

Thus, the consumer will accumulate reward points over time based on hisor her purchase at the merchant. Since the reward points are storedlocally on the smart card, the consumer will be able to dip the smartcard into a smart card reader terminal (such as a kiosk in a public areaor a terminal connected to a personal computer) and access the datastored thereon.

In addition to reward points, other rewards in the present invention maybe in the form of coupons, rebates, and/or a sweepstakes entry for theconsumer. For example, at certain intervals of points accumulation (e.g.for every 500 points), the consumer may be provided with a sweepstakesentry (and the points account may optionally be reduced accordingly).The sweepstakes entry may be in the form of a paperless entry(electronic only), wherein the clerk at the cash register will beprovided with a message that the consumer has reached an award level andis being awarded a sweepstakes entry. The trigger that indicates that asweepstakes reward has been provided may come from an external server orfrom the multi-function loyalty card itself. The cashier might then say“Congratulations Mr. Smith, you have just been awarded an entry into ourmonthly sweepstakes, in which you may win $5,000”. In addition, the POSterminal may be adapted to print out a coupon that evidences thesweepstakes entry, and the cashier would then give the coupon to theconsumer accordingly. In addition, the consumer may be notified byemail, regular mail, telephone, etc. Once the sweepstakes is held, thewinner(s) may be notified by using the information provided atregistration.

RFID Based Card Tracking

In another embodiment, the multi-function card has an RFID transponderchip embedded or otherwise attached to it. RFID technology is known inthe art and enables a mating transponder to determine if the RFID chipis within its proximity, and it can read a unique identifier associatedwith the RFID chip to ascertain which particular card (and whichconsumer associated with that card) is within its proximity at any giventime. The retail establishment will have a number of matingfixed-location transponders located strategically throughout the store,such as one or more at every aisle, one at the entry point, one at eachPOS terminal, etc. The fixed-location transponders are alsointerconnected to a network in the store, which also has a trackingserver computer. By communicating with each of the fixed-locationtransponders, the tracking server will be able to determine if anRFID-enabled card is within proximity to any one or more of thefixed-location transponders at a given time. This tracking informationmay be compiled by the tracking server computer and analyzed in realtime or offline to track the path of the card around the store as theconsumer shops in the store.

For example, the tracking server will be able to determine when acertain customer has entered the store, which aisles he visits and forhow long, and when the customer goes to the POS checkout terminal. Byutilizing enough fixed-location transponders, the tracking servercomputer may benefit from enough granularity to ascertain if a certaincustomer stops at a certain location in an aisle and how long he maydwell there.

This information is useful when used in conjunction with data obtainedfrom an actual sale to that consumer. For example, the tracking servermay determine that John Smith entered the store at 3:05 PM, andproceeded to the magazine aisle, where he lingered for 15 minutes beforemoving on to another aisle. The system will see that he did not purchaseany magazines (only vitamins) notwithstanding his long stay in themagazine aisle. This event-based geocentric information may be utilizedby the system in various ways. For example, Mr. Smith may be given acoupon at checkout for a discount on a magazine, since he showed aninterest in a magazine but did not purchase one. Or, he may be told bythe cashier that he will get increased reward points in his rewardaccount if he purchases a magazine now or at a later date (e.g. “Mr.Smith, you will get double reward points if you purchase a magazinetoday or the next time you come in”). In addition, the system may usethe customer location tracking information to award points and/orcoupons for products sold in an area of the store that was not visitedby the consumer (e.g. “Mr. Smith, we see that you have not visited ourgift card aisle—we would like to give you a $1 coupon (or double rewardpoints) for you to make a purchase of an item from that aisle.”) Thisincentive will help drive shoppers to parts of a store that mayotherwise suffer from low amounts of traffic.

Reward points may also be awarded based on the user simply visitingcertain locations of the store (or perhaps by staying near a locationfor a certain time period), since the RFID chip will enable the store'stracking system to determine the location of the user at any time. Afterthe user executes a transaction with the store's system, the earnedreward points may be added to the user's reward account on the smartcard accordingly. For example a user may earn 50 points for browsingnear the soda aisle, or 100 points for staying near the vitamins aisle.These points would be held temporarily by the store's system until theuser checks out and swipes his smart card, thus enabling the 150 pointsto be added to the user's smart card. The location tracking may becombined with the actual purchases made by the user, such that browsingin a certain aisle, accompanied by the purchase of a certain product,would yield a certain number of points.

When a user who is carrying a smart card enters a store with appropriateRFID tracking devices, the tracking device will be able to determine theidentity of the user via information exchanged between the smart cardand the tracking device (e.g. a user identification number). The systemwill be able to generate personalized offers based on prior shoppinghistory as well as a user profile that may be stored in the system'sserver. For example, when a user enters a store with the RFID technologyenabled, the system may determine that he usually purchases soda andsnacks, and then the system can generate offers, coupons, or otherincentives related to these products and present them to the user assoon as he enters the store via a kiosk or the like. The offers may beprinted out, or they may be electronically displayed. In thealternative, the user may be requested to insert his smart card into areader terminal, after which the system will be able to generate theoffers and either load them into the smart card memory and/or displaythem to the user to aid in his shopping. In the event that the userinserts his card into a reader terminal, then the system can use theprofile information directly from the smart card and need not refer to acentral server for this purpose.

A user would be able to access the data stored in his smart card (i.e.his account totals) by inserting the card into a reader associated witha computer such as a personal computer at home. The user would then beable to see the totals of each of his reward accounts, his exchangeaccount, etc., and also be provided with the ability to controlexchanges between accounts. For example the user could insert his smartcard into a terminal, and a window would automatically pop up on hisscreen showing the various account totals, etc. By using his mouse orkeyboard, he could make the desired exchanges. Any reconciliation thatmust be made with the reward issuing entities may be done at the sametime over a networked connection such as the Internet.

In addition, the card may be configured to store rebates and coupons.For example, the card may be programmed with one or more purchasecoupons that may be used at the point of sale by the consumer. Theconsumer would use the multi-function card when making the purchase, andthe UPC or other product identifier would be scanned at the POS terminaland then compare to any coupon files stored on the card. If there is amatch for that UPC, then the coupon discount would be applied, and thecoupon may be optionally deleted from the card (if it is a one-time usecoupon).

Similarly, rebates may be stored on the card. In one example, a rebatefor $3.00 for the purchase of a certain DVD is stored on the card. Whenthe consumer buys the DVD with the card, the rebate data appears at thePOS terminal and the consumer is given a form to send in to get therebate. The rebate may arrive as a check in the mail, or it may beposted to the account in the card immediately. Rebates may be added tothe card at a POS transaction as well, such as when the POS terminaladds a rebate to the card memory after purchase of a certain item.

Rebates and coupons may be added at the POS terminal, or they may beadded at any smart card kiosk that can interoperate with the card. Forexample, the consumer may have a smart card reader connected to a homecomputer. The consumer may dip the smart card into the reader, log ontoa server over the Internet, and exchange coupon and rebate dataaccordingly. Rebates may be added to the smart card memory, or therebate may be executed for a prior purchase wherein the purchase recordis read by the server and the rebate amount is credited to theconsumer's account.

User Profiles

A user profile may be stored in the smart card. The user profile wouldcontain various information regarding the user, including but notlimited to any or all of the following types of information: name,address, social security number, age, gender, income, demographics,psychographics, biometrics, names of various rewards accounts,passwords, prior purchase history including details of transactionsexecuted, and preferences. Preferences may indicate which accounts onthe smart card that the user would prefer to utilize in certainsituations as mentioned above; e.g. use the VISA application atsupermarkets but use the AMERICAN EXPRESS application at gasolinestations. Preferences may also indicate how the user would like toutilize reward accounts; e.g. he would prefer to pay for an item with50% points and 50% credit, or he would prefer to pay for businessexpenses with credit only and personal expenses with points only, etc.These user preferences may be modified and accessed by the user when thesmart card is inserted into an appropriate reader or terminal as knownin the art. These user preferences may also be utilized by the variousapplications stored in and executed by the smart card as required. Forexample, when the user swipes the smart card to pay for gasoline, an thepurchase application may check the user profile to determine (1) whichaccount to use unless otherwise specified, (2) how to pay for the item,e.g. with points and/or credit, etc.

The smart card may be utilized in a real-time interactive transactionbetween a user and a merchant at the point of sale. When a user presentsthe smart card to the POS terminal at the merchant, the terminalaccesses the memory and/or firmware of the smart card and can executeone or more of several types of real-time transactions. The POS terminalmay upload into the smart card memory one or more special offers,coupons (and reward points) that are based on the current transaction.For example, if a user is purchasing dog food, the POS terminal mayupload dog food coupons to the smart card. These coupons may be good forthe next visit with the merchant, or they may optionally instantlyredeemable if desired.

The merchant POS terminal may interact with the smart card (inparticular with the user profile) by utilizing a scoring model todetermine a user's relative worth to that merchant. That is, byanalyzing profile data, including prior purchase transactions, as wellas other user data, the POS terminal can assess a score to the user thatwill reflect the relative value of that user to the merchant. Forexample, if most of a user's purchases were of low margin items, thenthat user would have a lower score than a user that purchase more highmargin items, since high margin sales are generally worth more to amerchant. That user may be provided with coupons, rebates, points, etcthat are reflective of that user's relative value as indicated by thescoring model. This incentive system will interact in real time with theuser to provide optimal benefits to both the ser as well as the merchantbased on the parameters set forth in the scoring algorithm.

In another embodiment, users who provide relatively more data to theirprofile (and allow their profile data to be used by merchants) will beprovided with relatively greater rewards by the participating merchants.For example, if a user is willing to share his income data withmerchants, those merchants may reward him with more coupons, rebates,reward points, or other incentives, than a user that is unwilling toshare his income data. Since a user's income data is valuable to amerchant he is willing to provide a greater incentive to those usersthat make it available in their profiles on the smart card.

The user may have a credit card, debit card, or stored value card thatis linked to their points account in such a way as to permit them to payfor purchases with a merchant by using the card, wherein the merchantuses the existing credit card payment infrastructure as if payment werebeing made/authorized by a bank linked to the credit card or debit cardaccount, but in fact the card may be linked to the user's pointsaccount. In this manner, the user and merchant can use the pointsaccount to pay for purchases in a seamless manner whereby points areused for consideration rather than or as a supplement to cash andtraditional credit.

Central Server Aggregation Model

The centralized exchange server system and method, as set forth in the'640 patent, will now be described in detail. With reference to FIG. 4,a plurality of reward server computers 10, 12, 14, a trading server 20,a merchant computer 30 and a user computer 40 are shown in communicationwith a network 2. The network may comprise any type of communicationprocess where computers may contact each other. The present inventionwill be described with respect to an Internet-based network where thereward server computer 10 is associated with an airline frequent flyerprogram. Any type of reward server may also be used in this system. Thereward server computer may be a credit card reward program such as thatoffered by American Express where the user earns rewards based onpurchases, or an advertising based award program where the user earnsrewards by selecting advertising content for viewing on the Internet.

A user of this system may acquire and accumulate rewards or valuesthrough any prior art means such as shown on FIG. 1, which are thenposted in a user's reward point account 52 that is accessible throughthe reward server computer 10. The trading server computer 20 is incommunication through the network 2 with a user on a user computer 40and is additionally able to connect to the reward server computers10,12,14 through the network 2 in accordance with techniques well knownin the art for Internet communications. Alternative electroniccommunications methodologies may be used, such as an ATM adapted toallow a user to access his accounts, or a smart card reader, etc. Themerchant computer 30 is representative of any site that can communicatewith the network that has goods or services for sale or trade. Themerchant may have a direct relationship with the trading server wherethe direct relationship allows for a streamlined process for allowing auser to acquire products offered via the merchant computer.Alternatively, the merchant computer may be an independent merchant thatdoes not currently have a profile defined in the trading server thatwill accept payment from another computer system in any one of wellknown e-commerce embodiments.

The rewarding entities may be any type of entity that has a service forallocating points or consideration for user actions or values fordetermining a user's relative value to the system. The reward servercomputers 10,12, 14 may be of any type of accessible server capable ofholding data about a user along with a corresponding earned value thatis negotiable for other goods, services, or points of another system. Inthe preferred embodiment, the airline reward server computer 10 mayrefer to one or several different airlines that have frequent flyerprograms or the like. The credit card reward server computer 12 mayrefer to any type and number of credit card server systems capable ofholding, increasing or decreasing a user's earned rewards acquiredaccording to the terms of the credit card program to which the user hasenrolled. The marketing reward server computer 14 may refer to one or amultitude of network accessible marketing systems that allow a user tohave an account where points or other redeemable value may be stored,updated and redeemed by a user. The trading server computer may be anytype of computer system that allows users to access the system in orderto perform the processes involved in this invention. In the preferredembodiment all of the systems described are accessible through theInternet and the user may automatically or freely navigate to any siteby means well known in the art. The present invention allows pointsissuers, who originally sold reward points in their program to thirdparties for use as an incentive by those third parties, to repurchase ortrade points at a discount, thereby reducing their liability andallowing for a trading strategy that enables points to continually besold and repurchased. This process may be executed under a separateaccounting procedure than what is otherwise used for points that aregranted directly from the issuer.

The method of allowing the user to redeem the accumulated reward pointsfrom one or more of a plurality of reward entities will now be describedwith respect to FIG. 4 and the data flow diagram of FIG. 6. The tradingserver system would allow users to “log in” to access the functionalityprovided where the user may interact with applications, forms orcontrols. For example, the user may view his account information byusing a web browser which may automatically select or allow the user toenter the appropriate identification information and then selectbuttons, links or other selectable objects to navigate to the part ofthe system desired. In the alternative, navigation may be doneautomatically by the web site, and thus be transparent to the user (i.e.not directly controlled by the user). If the user does not yet have anaccount (step 602), then the user may be enrolled per the flow diagramof FIG. 8 (step 604) as discussed below. The user, from the usercomputer, makes a request to the trading server computer 20 viacommunications flow 102 (step 600), requesting redemption through thenetwork 2 for either all or a portion of the pre-accumulated rewardpoints stored for the user in one of the rewarding entities. A user'sreward point account 52 is associated with each of the reward serversbut is only shown in FIG. 4 connected to the airline server for sake ofclarity. Communications are made by the trading server 20 to the usercomputer 40 via communications data flows 104. The user mayinteractively select rewards to be redeemed, or the system may determinewhich rewards are to be redeemed based on a previously defined userprofile rule or other third party profile rule (such as an issuer) (step606). The trading server computer 20 “obtains” the reward points balanceinformation from a reward server 10, 12, 14 stored in the user's account52 by contacting the appropriate reward server via communication flow110 (step 608) according to the user's requirements, by using theconnection parameters as defined in a database 54 on the trading serveras shown in FIG. 5. In one embodiment, the trading server retrievesreward point account balance information via communications flow 114(step 610) from the reward server for the user. In another embodiment,the trading server transfers as part of the communication 110, therequested reward points to be redeemed (step 612). The reward servercomputer 10 decreases the user's reward point account 52 by therequested number of reward points (step 614). The term point is used toreference any earned value that has a cash equivalent or negotiableworth as in “frequent flyer” point or mile. The reward server computer10 conveys consideration to the trading server computer 20 where theconsideration corresponds to the number of reward points decreased inthe user's account 52 on the reward server 10 (step 616). For example,the consideration may be in the form of a monetary credit to an accountthat exists between the trading server and the reward server, that getspaid at the end of a predefined billing cycle (i.e. every month) or inreal time or upon execution of a trade or redemption procedure. Thetrading server computer 20 increases the reward exchange account 54associated with the user by the received number of points (step 620).The trading server computer 20 in turn, receives the consideration fromthe reward server computer 10 (step 618).

Similar communications are made between the trading server 20 and thecredit card reward server 12, as indicated by the data communications120 made by the trading server 20 to the credit card reward server 12and the data communications 124 made by the credit card reward server 12to the trading server 20. Likewise, communications are made between thetrading server 20 and the marketing reward server 14, as indicated bythe data communications 130 made by the trading server 20 to themarketing reward server 14 and the data communications 134 made by themarketing reward server 14 to the trading server 20. In each case, thetrading server 20 increases the user's reward exchange account 54 by thereceived number of points from the credit card reward server 12 and themarketing reward server 14, respectively.

In the second part of the transaction (see FIG. 7), the user from a usercomputer 40 may make a request 150 to purchase an item from anassociated merchant computer 30 (step 700) or from a catalog or networkof offerings or special event offerings as a one-time or unique event.In the preferred embodiment, the merchant computer system will be anetworked computer system accessible via the Internet. The user wouldvisit the site by selecting on a link from the trading server's web siteor by entering the name or address of the destination site or productbrand or category desired. The web site may also be pushed to the userrather than pulled by the user as described above. The user may identifyone or many items to be acquired from one or several merchants 30. Theuser elects to pay for the desired item with points (step 702), and theuser is redirected from the merchant server to the trading server atstep 704. If the user does not have an account (step 706) then the useris enrolled per the flow diagram of FIG. 8 (step 708). The merchantserver computer 30 would confirm that the user has sufficient points orvalue to purchase the selected item by communicating with the tradingserver 20 via communication flows 140, 144 in order to check the user'sreward exchange account 54 (step 710). If the user does not have enoughpoints in his reward exchange account at the trading server 20, then theprocess of trading more points from the user's reward point account 52into his reward exchange account 54 is executed by branching to the flowdiagram at exit point A (step 712) which brings the process to the flowdiagram in FIG. 6 discussed above. After enough points are traded, theuser continues with the process from step 712 as shown in FIG. 7. Theuser may also borrow additional points to make purchases. The tradingserver computer 20 would request the merchant computer to deliver theitem to the user. The user delivery information may be retrieved fromthe trading server computer 20 or may be supplied in some other manner.The trading server computer 20 would decrease the user exchange account54 by the number of points or value corresponding to the purchased item(step 714). The trading server computer 20 conveys consideration to themerchant computer 30 equivalent to the cost of the item by means wellknown in the art of electronic commerce (e.g. by a preexisting account,credit card, etc.) (steps 716, 718). In the alternative, theconsideration may be a direct transfer of points to an accountassociated with the merchant. The merchant then completes thetransaction at step 720, for example by delivering the purchased item. Atransaction fee may be charged by any of the parties in the form ofpoints, cash or cash equivalent, etc. Also, a delivery fee may becharged for delivery of the product.

Policies and profiles may be established to automatically contact eachof the reward servers according to a user profile, merchant profile,broker dealer profile, issuer profile, or product provider redemptionprofile (see FIG. 5) to transact the required payment for an itemselected by a user. This profile may indicate the order of redemptionand method of providing funds sufficient to cover the purchase afterredeemable points are exhausted. For example, if a user has a preferredair carrier where the user would like to retain mileage in that rewardsystem, the user may specify a priority of use indicating the rewardresources that should be exhausted prior to accessing the most desirablerewards. Following the selection of an item to be acquired, the servermay contact all of the reward resources according to this profile toselectively redeem each as required to meet the purchase price. Theprocess may be performed in real time or as a background processtransparent to the user where the user may select how the transactionshould proceed. If the user exhausts lower personal worth resources fromthe reward servers, the system may be required to contact the userbefore the transaction is allowed to proceed to redeem points. Aclassification system may also be used to indicate rewards of similarworth or category. If for instance, a frequent flyer program supportsmultiple classifications of miles that may be redeemed differently, theuser may optionally define how those resources should be managed duringredemption. The redemption process would then honor those rules electedby the user to select from several different reward programs instead ofredeeming rewards strictly on a value required from the first rewardprogram contacted or based upon a preferred hierarchy defined by thesystem or its members.

FIG. 8 describes the process steps involved in enrolling a user toutilize the trader server. The user accesses the trading server 20 atstep 800 and selects an option to create a user account at step 802. Thedata entered by the user may be used in determining whether a userallows unsolicited offers to be presented from the trading server. Inaddition, offers may be provided in an automatic fashion without userinteraction. The user's preferences for manufactured goods services,products, travel destinations, hobbies, interests or any other userentered criteria may be stored in the database for subsequent use by thesystem (steps 804 and 808). The trading server has the ability toreceive offers from reward servers or merchants (steps 806 and 808)which may then be directed in real time to users based on the databaseprofile information provided by the user or other third party (e.g anissuer, merchant, etc.) (see FIG. 9). At step 900, the reward servercontacts the trading server with an offer to redeem points. Similarly, amerchant may contact the trading server with an offer to be distributedto members (step 902). The trading server records the offer in adatabase (step 906), and the trading server may record a limitedconversion rate in its database (step 906). The reward server may thencontact the user with an offer to redeem at step 908. Optionally, theprocess may branch to the flow diagram in FIG. 6 discussed above (step910).

The trading server may also be contacted in response to a button orhyperlink located on a web page accessible by the user from the airlinereward server (FIG. 10, steps 1000 and 1002). The process may continueto that described with respect to FIG. 6 for trading points into areward exchange account (step 1004). In a similar manner, hyperlinks orcalling routines may allow a user to access a reservations system ormerchant from the trading server. The link would direct the user topartner or associated air carriers where the points in a user exchangeaccount on the trading server 20 may be used to acquire hotelaccommodations, special offers, reduced fare or free flights.

The system used to implement the aforementioned method will now bedisclosed with respect to FIG. 5. The system is comprised of a tradingserver computer connected to a network of computers where a userinterface is established whereby a user from a user computer may accessthe server to request the transaction to contact a reward servercomputer system. In the preferred embodiment, the server has memorymeans for storing the user account information, user profiles and ruleswhich may be specified by the user, system, or merchant. The tradingserver also has communications means to allow users to access the serverand to allow the trading server to contact reward servers and processingmeans to interpret the rules and coordinate the contact to therespective servers. The processing means is adapted to allow the user torequest and exchange consideration for rewards from reward servers. Theprocessing means additionally is adapted to coordinate the exchange ofconsideration and increase or decrease the user exchange accounts storedin memory in response to actions performed by the user computer, rewardserver and merchants and issuers.

In the preferred embodiment, the memory means comprises a databasestructure that is used to record the transactions associated with thepreviously described method. Records indicating the changes and currentvalue of user exchange accounts are updated according to the requestprocessed by the processor.

In response to a request for redemption, the trading server looks up thecontact properties of the reward server to be contacted. The userinformation is submitted to the reward server to display the availablepoints that may be redeemed. In another embodiment, the requestadditionally contains a value to be redeemed. The processor establishesa communication link with the reward server and a transaction request issent to the processor of the reward server. The processor of the rewardserver may perform actions that may allow or refuse the requestedaction, or suggest an alternative action. In another embodiment, thetrading server processor may be granted direct authorization to modifythe user's records in the reward server database without analysis by theprocessor of the reward server. A conversion rate may be applied to thetransaction such that the reward server reduces the available rewards orvalue in the user's account. The reward server then transfersconsideration to the trading server that corresponds to the valuereduced or available in the reward system. In response to the receipt ofthe transfer or approval of the transfer, the trading server incrementsthe user account balance to reflect the received consideration and theconnection to the reward server is terminated. A transaction log may beused to record each of the transactions in case a reconciliation processis required at a later time. The new value, whether increased ordecreased in the user's exchange account may then be stored until a userfinds an item to be purchased.

The user selects the desired object from the merchants by indicating thetype of product or service to be procured. In one embodiment, thetrading server contacts the merchant server to return to the user a listof products that match the user's search criteria or if the user hadspecified in detail what was desired, the product may be directlyacquired from a merchant or broker/dealer. A communication link isestablished between the trading server and the merchant computer ordesignee for e-commerce. Direct acquisition may be enacted by contactingthe merchant or broker/dealer computer and supplying the user indicia,the product indicia, and the redemption value sufficient to secure thetransaction. In response to the transaction request, the merchantcomputer or broker/dealer will receive the consideration supplied andcontract for the delivery of the product. Unfulfilled requests arestored and when available can be pushed to the user. In anotherembodiment, the consideration required for the item selected is sent tothe trading server where based on the available points in the user'sexchange account the trading server will determine whether theconsideration is available. An authorization process may be incorporatedat this point to request authorization from the user or in a moresimplified process, the consideration will be transferred to themerchant computer and the user's exchange account will be reduced. Themerchant computer will receive the consideration and will effectuate adelivery transaction to be issued.

The goods may also be placed under direct control of a distribution armof the trading service so that the user places the order with thetrading service directly and the merchants are not directly involvedwith the sale of the goods.

In a situation wherein the user finds it necessary or desirable toreturn a product, such as when the product may be damaged, thenprovision is made for the restocking of points back into the useraccount (rather than a cash refund), with an optional restocking feebeing charged to the user in the form of points.

Thus, the present invention provides a liability management system forissuers of reward points, which allows them to take points off the booksand eliminate them, if desired, at a discounted rate. This systemenables the sale or repurchase of points with a trading strategy inwhich points need not expire.

Other aspects of this invention will now be disclosed that will enhancethe reader's understanding of the application of this invention.

The user can purchase points from the system, borrow points from thesystem, etc., and basically treat the points as cash consideration forpurposes of such transactions.

The system can prioritize the order of points being traded based on apredetermined set of rules such as in higher value points being issuedbefore those with a lower value.

Merchandisers also benefit from the use of this system where anothermarketing channel is afforded for products that are often purchased byfrequent travelers with high disposable income. Products and servicesencompassing jewelry, flowers, limousine transport, timeshare rental maybe exchangeable for points stored in this system. Items purchasedthrough the system may also be paid for by a combination of points andcurrency which might be the case when a user does not have enoughaccrued points to meet the purchase consideration of an item selected.There may be designations where a percentage of the product may be paidwith points, with the rest in cash or cash equivalent.

It is anticipated that high quality limited access products may benefitfrom the distribution methods afforded by this system. For example,companies like SONY and Chanel may take advantage of this distributionmeans without impacting the level of quality or excellence associatedwith their products.

Manufacturers can discount or liquidate goods for points in a mannerthat doesn't negatively affect the perceived value of the goods (i.e.not in direct competition with the mainstream sales). That is, themanufacturer can place overstocked, end of run type goods and the like,place them in the chain of distribution for exchange with points, andnot be in direct competition with cash sales of its mainstream products.

Resort destinations that are managed by property management companiessuch as RCI may be integrated into this system where instead of tradingaccommodations with only those having similar property, it is nowpossible that the rental of the property may be achieved by conversionfor points or points plus a property timeshare or a percentage of cash.Rooms may be booked with discounts that vary in accordance with thenumber of rooms available, which can change in real time as per thechanging availability of rooms.

Offers may be distributed to users of this system where substantialrebates or reduced rates are described in the offer. Time sensitiveproduct offerings can also be accommodated in the system where the valueof the product is decreased according to a life span of the product.Time sensitive product offerings such as food products or concerttickets, airline departures, hotel room rentals and the like can have anassociated diminishing or escalating value based on the length oravailability of the offer. This invention may be used to provide hotelrooms such that when rooms are available and the date of use approaches,the rental price may decrease (the same methodologies may be used tosell advertising space that is time-sensitive).

Using this system it is now possible to coordinate the products ofseveral different providers into one package. A user of this system maytherefore select an airline, hotel, car rental and Broadway show ticketsin New York, individually or in a prepared package from one location bytrading points where the package may not have existed before where thetrading system coordinates all aspect of the transaction and reduces theuser's exchange rewards in a corresponding manner.

Other purchasing leverage not specifically addressed previously may alsobe acquired by combining the power of a pool of users of this systemwhere these users may be allocated access to products or services notgenerally distributed to the remainder of the system users. Pointscollected in the system by these users may afford them access to limiteddistribution channels where higher discount levels or premium productsmay be acquired. Direct access to cartel or special club products suchas diamonds, bulk or price-advantaged products, duty free items andother restricted access product or service offerings are alsoaccommodated through the coordination of the trading server with thesespecialized service and product providers. For example, a preferredclient distribution channel such as found in a European market forluxury goods would be made available to users of this system where theprices for the objects in this preferred channel may be significantlylower than retail for objects that are typically reserved for limiteddistribution at premium prices. The trading server may additionally haveexclusive rights to allocate access to certain premium products,services, events, travel destinations or accommodations in accordancewith any right or grant permitting such allocation to any user of thesystem. A distribution channel may make available exclusive products forall or a limited amount of the members of the system where the tradingserver system controls access to the offer. Parameters associated withthe available quantity, duration, exchange rates, etc may be input intothe system to be used in the allocation algorithm to restrict the offer.Upon user access, the trading server would, in these cases, modify thepremiums offered to reflect the immediately attainable items for thecurrent user and may additionally display or provide access to premiumsthat may be acquired through payment by other means (i.e. cash, charge,debit) to make up the difference between the user's available points andthe points required to accept the offer.

In another embodiment of this invention, airlines seeking to providehigher levels of personalized service for their business travelers willprovide access to the Internet or access to in-flight services such asvideo games, for a fee or in place of granting mileage rewards ontranscontinental or transatlantic flights. Access to video games orother services (e.g. meals and drinks) may be afforded to the travelerwhere the availability of different games depends on the number ofreward points traded in by the traveler. The rewards may be convertedusing the trading server of this invention, where the user may opt toforego collecting mileage in return for accessing on-board entertainmentprovided in a standalone mode or in a linked mode. For example, usersmay select to play video games, access the Internet or utilize Email viaa seatback or tray table mounted interface and controller. The user mayoptionally connect a laptop computer to an interface port of theaircraft using an Ethernet, parallel, USB connection or proprietaryconnector provided by the air carrier. In the preferred embodiment, theuser would select the connection speed and type for communications basedon whether in-flight or external services were to be accessed. Othertypes of business services may additionally be used and accounted for,such as using network printers or fax equipment. RF, satellite ormicrowave based communications may be used for real time communicationswhere sufficient geographical coverage is provided.

The interface would allow a user to login using the frequent flyeraccount information or preferably, the trading server account login idand password, where the user may use points awarded from another aircarrier or point server to “pay” for the services accessed. The accountbalance from the trading server may be transferred to the localcontroller prior to takeoff for each user that logs in to the tradingserver. Once the plane has departed, depending on the linking or accesscapability afforded by the air carrier or service provider, the user'saccount may be modified in real time or upon reconnection followinglanding, based on services selected by the traveler. If a real time linkis supported, the user's exchange account may be periodically debitedaccording to the services selected and duration of use, certifiedagainst the passenger log.

In another aspect of the invention, an electronic bartering system isimplemented, wherein product manufacturers, producers, distributors,etc. can provide surplus or overstocked goods for liquidation into thechain of supply of the system and exchange then for points as describedherein. This provides an inventory management and liquidation system forthese manufacturers and sellers.

In addition, the value of the reward points may fluctuate as a functionof the company's performance, which may be measured by reference to theprice of its stock, revenue, earnings, or some other parameter that isagreed to that reflects the relative performance of the company. In thismanner, companies that perform well would provide an additionalincentive to a user for using their frequent use program rather than acompetitor's program. For example, all other parameters being the same,a user would likely choose the Acme credit card company over the Betacredit card company when the user determines that the Acme companyperformance results in a 10% increase in the value of points otherwiseearned by using its credit card. The value may also fluctuate as afunction of the number of points outstanding or the desirability of theissuer to reduce its liability or make it more robust.

1-34. (canceled)
 35. A merchant terminal comprising: means for reading aportable multi-function device comprising a plurality of transactionapplications stored in a data memory on the device, the plurality oftransaction applications comprising a default transaction applicationdesignated in a user profile on the portable multi-function device forexecution of a purchase transaction, a display screen programmed todisplay the plurality of transaction applications read from the device,means for selecting a transaction application from the plurality oftransaction applications displayed on the display screen to override thedefault transaction application designated by the portablemulti-function device for execution of the purchase transaction, and aninterconnection to a computer network for effecting payment for thepurchase transaction using the default transaction application or, ifselected, the selected transaction application.
 36. The merchantterminal of claim 35, wherein the display screen is further programmedto display a plurality of payment options associated with a selectedtransaction application.
 37. The merchant terminal of claim 36, whereinthe plurality of payment options associated with a selected transactionapplication comprises credit associated with a credit card.
 38. Themerchant terminal of claim 36, wherein the plurality of payment optionsassociated with a selected transaction application comprises rewardpoints associated with the credit card account that are stored on theportable multi-function device.
 39. The merchant terminal of claim 36,wherein the plurality of payment options associated with a selectedtransaction application comprises reward points associated with thecredit card account that are stored on a remote rewards account.
 40. Themerchant terminal of claim 36, wherein the plurality of payment optionsassociated with a selected transaction application comprises a displayof total reward points accrued.
 41. The merchant terminal of claim 36,wherein the plurality of payment options associated with a selectedtransaction application comprises a display of points awarded thepurchase transaction.
 42. The merchant terminal of claim 36, wherein theplurality of payment options associated with a selected transactionapplication comprises an option to enter a number of reward points to beused to apply to the purchase transaction.
 43. The merchant terminal ofclaim 42, wherein the plurality of payment options associated with aselected transaction application comprises a price to be applied to thepurchase transaction when the number of reward points entered are usedfor the purchase transaction.
 44. The merchant terminal of claim 42,wherein the plurality of payment options associated with a selectedtransaction application comprises a number of reward points remainingwhen the number of reward points entered are used for the purchasetransaction.
 45. The merchant terminal of claim 35 further programmed toupload a purchase incentive into the data memory of the device based onthe purchase transaction.
 46. The merchant terminal of claim 45 whereinthe purchase incentive comprises a coupon.
 47. The merchant terminal ofclaim 45 wherein the purchase incentive comprises reward points.
 48. Amethod of executing a purchase transaction comprising: a merchantterminal reading a portable multi-function device comprising a pluralityof transaction applications stored in a data memory on the device, theplurality of transaction applications comprising a default transactionapplication designated in a user profile on the portable multi-functiondevice for execution of a purchase transaction, the merchant terminaldisplaying on a display screen the plurality of transaction applicationsread from the device, the merchant terminal receiving a selection oftransaction application from the plurality of transaction applicationsdisplayed on the display screen to override the default transactionapplication designated by the portable multi-function device forexecution of the purchase transaction, and the merchant terminalinterconnecting to a computer network for effecting payment for thepurchase transaction using the default transaction application or, ifselected, the selected transaction application.
 49. The method of claim48, wherein the merchant terminal further displays a plurality ofpayment options associated with a selected transaction application. 50.The method of claim 49, wherein the plurality of payment optionsassociated with a selected transaction application comprises creditassociated with a credit card.
 51. The method of claim 49, wherein theplurality of payment options associated with a selected transactionapplication comprises reward points associated with the credit cardaccount that are stored on the portable multi-function device.
 52. Themethod of claim 49, wherein the plurality of payment options associatedwith a selected transaction application comprises reward pointsassociated with the credit card account that are stored on a remoterewards account.
 53. The method of claim 49, wherein the plurality ofpayment options associated with a selected transaction applicationcomprises a display of total reward points accrued.
 54. The method ofclaim 49, wherein the plurality of payment options associated with aselected transaction application comprises a display of points awardedthe purchase transaction.
 55. The method of claim 49, wherein theplurality of payment options associated with a selected transactionapplication comprises an option to enter a number of reward points to beused to apply to the purchase transaction.
 56. The method of claim 55,wherein the plurality of payment options associated with a selectedtransaction application comprises a price to be applied to the purchasetransaction when the number of reward points entered are used for thepurchase transaction.
 57. The method of claim 55, wherein the pluralityof payment options associated with a selected transaction applicationcomprises a number of reward points remaining when the number of rewardpoints entered are used for the purchase transaction.
 58. The method ofclaim 48 further comprising the merchant terminal uploading a purchaseincentive into the data memory of the device based on the purchasetransaction.
 59. The method of claim 58 wherein the purchase incentivecomprises a coupon.
 60. The method of claim 58 wherein the purchaseincentive comprises reward points.